Innovative Startups: Nearly half the young firms dealt in innovative products

About half of the startups dealt in innovative products and over 20 per cent had filed patents for their products, a survey by the Reserve Bank of India based on responses from 1,246 startups has found. The pilot survey on the Indian startup sector was conducted from November 2018 to April 2019. Around three-fourths of respondents were from the states of Karnataka, Maharashtra, Telangana, Delhi and Tamil Nadu.

Startups in six sectors — agriculture, data and analytics, education, health, IT consulting/solution and manufacturing — accounted for nearly 50 per cent of the survey respondents.

“The annual turnover for over one-fourth of the respondents was up to Rs 10 lakh whereas around 20 per cent of startups did not report any revenue generation. “Less than one-fifth of the respondents reported that their turnover exceeded Rs 1 crore,” the survey revealed.

Only 14 per cent of startups had more than 10 employees in the first six months of their operation but as the sector matured, the share increased to 40 per cent at the time of conducting the survey. Also, around 36 per cent of the startups availed institutional loans (including from banks) to finance their activities.

As per the survey findings, over 70 per cent of the participating startups were set up in the last three years (2016-17 to 2018-19). Further, nearly 88 per cent of the founders had an academic qualification of at least a bachelor’s degree. Over 10 per cent of the founders were below 25 years of age and another 55 per cent were in the age group 25 to 40 years.

The survey also said almost a half (49 per cent) of the respondents informed that they were in the early stage of revenue generation while another 31 per cent were in the growing stage. Of the remaining startups, which were yet to generate any revenue, as high as 86 per cent were aged below three years, it said.

Also, almost 58 per cent of the startups had plans to get listed on the Indian stock exchanges in the next five years, it added. “Participants reported market/industry demand and team experience as the most important factors for setting up the startups,” the RBI said.

Future plans of the startups included hiring staff for supporting business expansion, getting listed on the Indian stock exchanges and seeking acquisition, among others. Only 14 per cent of startups had more than 10 employees in the first six months of their operation but as the sector matured, the share increased to 40 per cent at the time of conducting the survey, revealed the survey findings. Most of the startups had at least two co-founders.